The Online CMO by Philip Hallenborg

The email spend portion of the average digital marketer is approx 2% on average (see eMarketer November 2008). Why wouldn’t emarketers spend more on this holy of e-grails? Some would answer that because the cost of sending an email to the customer database is so low, the spend will always be very low and hence a small portion of spend. They may also argue that the majority of email programmes contain price oriented call-to-action messaging and place themselves at the very end of the purchasing funnel.

True. And not true. My view is this: Most companies have no clue of the number of touch points they have in their customer relationships. More often than not customers will receive a call from there favorite sales rep the same week the company is doing TV advertising, sending monthly mailers and worst case also emails. Many large companies run a digital budget that in practice lives independently from the print/ offline budget and vice versa. This is a natural result of multi market/segment/product interests under the same roof.

The problem with low spend is that regardless of a predominantly high return on investment (ROI) on that very spend (which is probably positively skewed given allocation of fixed retainers, IT costs etc), it generates few dollars. Even though margin profiles maybe good, I would claim that many opportunities in business generation are lost in low volumes.

Email is a poorly utlized asset. Here are the reasons why:

1. Although media agencies often use email as a component of ad-hoc campaigns, many media agencies are not actively involved in the more bread and butter type recurring campaigns because of their dependency on complex customer data management. This leads to a fragmented approach where email is managed internally and externally (often by a third party email dedicated agency).
2. Companies struggle to make any sense out of the vast amounts of customer data. On paper, there are CRM systems with triggers and targets. But in practice few companies have the capabilities to transform promotion decisions into data base requirements and finally into a relevant email with a compelling creative.
3. Because many email programmes are not appropriately resourced, negative side effects such as understated ROI (driven by lower than necessary open/click through), opt-outs by attractive customers and even privacy violation charges, arise.

Finding incremental opportunities (read free sales) should be the first priority of any marketer in these times. Forget a CRM system and triggers. I would suggest a much more simplistic approach:

1. Work on the organizational parts of how to execute an email. Make sure the entire organization – from product and brand to data mining and creative execution – works together. Create a task force for each email prototype. Include the product manager, the database analyst, the creative talent and you will see wonders. I have.
2. Start with some basic tests  - create an à la carte menu of 10 successful campaigns across your relevant product categories of your business. Make sure they are known in the organization and refine these. Eventually, your organization should have a library of model campaigns that have been tested and can be used according to your objectives.
3. Limit the number of touches. Think: “take out something every time you put in something”. Many emarketers forget that you are looking for the optimum $/ customer over say a year, not the greatest open rate or conversion on one email. Less is more. Make sure not to touch a potential high end customer with a low end offer etc.

Although this sounds somewhat trivial there is a reason why open rates and click through rates seem to be declining over time (eMarketer.com/ “Epsilon Q3 2008 e-mail trends and benchmark”). As emarketers we simply forget that we are sending the same emails that we so much hate to receive.